At age 18, after dropping me off at my first apartment to live out my undergraduate College years, my Dad left me with one book on financial planning: “The Book for The Young Fabulous and Broke” by Suze Orman.
He knew I would get my financial aid and most likely blow it regardless of what he told me. So, he tried to set me up for success by giving me a book on financial wellness.
Imagine: You at 18 years old, moving into your own place with your own car, and thousands of dollars in the bank to get you through the next six months. How would you spend that money? Would you save for retirement? Probably not. Buy clothes? Most likely. Pay rent? Yes. Spend all of that money in one month? Just about.
He knew that I would need guidance with the large sum of money financial aid would drop into my account and he wanted to get me thinking like an adult: seeing the big financial picture. Did it work? Yes and no. I did not fall for the numerous credit cards offered me in exchange for a t-shirt or water bottle, and I paid six months rent first thing. I started saving for retirement at $50 a month, and I set up and stuck to a budget. However, I did not save an emergency fund and I still bought a lot of things, BUT my dad started me on the path to financial planning that I live by today.
Financial Planning
The goal of financial health is not just to survive, but to live comfortably. After obtaining financial security, I had to determine what would be necessary for a cozy retirement. Meaning a retirement that not only pays my bills, but allows for travel, sickness, and the occasional indulgence. In today’s world that means building wealth.
After many years I reread “Young Fabulous and Broke,” and finally took full advantage of Orman’s advice. To this day, I do not settle for positions in my career that will not pay my bills. As a woman, career advice rarely addresses the fact that we are paid less for the same work as men. With Suze Orman in my head I have always negotiated for the max when taking a new job, and that has served me well time and time again. However, after graduate school, I needed a plan for paying off student loan debt. Enter, Dave Ramsey.
Never having debt before College, I had no context for successful debt payoff. I knew that I could continue making minimum payments until the debt was paid off, but I wanted to find a faster way to tackle my debt. Luckily, the planner groups I frequent are big into Dave Ramsey and it was through that community that I learned about the “Total Money Makeover.” I used Ramsey’s snowball method to pay off my student loan debt. Also, his baby steps mirror that of Orman in that a large emergency fund is a priority. Both Orman and Ramsey’s financial plan follow up the emergency fund advice with steps to build retirement savings. Specifically, investing.
Building Wealth
Years after reading Young Fabulous and Broke, I took Orman’s advice, and maxed out my 401k match, plus I took out a Roth IRA. Yet, I still wanted to understand investing better. So, I turned to google, and stumbled upon a dad similar to mine who created a blog sharing financial guidance he gave his daughter when she turned 18.
More than anything, the stories on JL Collins blog resonated with me. The advice was coming from an insider, so I listened. All of Collins instructions are still available on a very old school blog, but he also published “The Simple Path to Wealth” a couple of years ago detailing his advice. In this book, Collins explains the risks and rewards of investing. Alongside how to go beyond a large savings to building money for retirement.
My goal is not to be rich, but to have enough personal wealth to not struggle in my retirement. This need to understand how the little person amasses wealth lead to the discovery of “I Will Teach You To Be Rich” by Ramit Sethi. This book is currently experiencing a revival, but 10 years ago, Sethi published a simple plan to build wealth. Sethi’s advice takes the basics from the previously mentioned books and gives the end goal tangibility. Building wealth via not only a plan, but scripts that help maximize credit cards, negotiate a higher salary, and concrete steps for building wealth for retirement.
My dad knew what he was doing when he gave me that first book. And now I can truly appreciate the head start my father gave me. He knew at 18, at the cusp of adulthood, I would have too much going on to responsibly spend that money. But he also knew that giving me the big financial picture would matter most in the long run.
